US SEC goes after crypto exchange Coinbase, just one day after suing Binance

Just one day after it went after world's largest cryptocurrency exchange Binance, the United States Security and Exchange Commission (SEC) has sued Coinbase, the largest cryptocurrency platform in the country. The SEC has accused Coinbase of operating illegally because it failed to register as an exchange. This is being seen as another blow to the crypto industry.

The cases against both crypto exchanges are part of SEC Chair Gary Gensler's push to assert jurisdiction over the crypto industry. Gensler on Tuesday repeated his charge that the crypto industry was like "Wild West" that has undermined investor trust in the US capital markets.

"The whole business model is built on a noncompliance with the U.S. securities laws and we're asking them to come into compliance," Gensler told CNBC.

Add WION as a Preferred Source

Watch | US sues Binance, founder Zhao alleging securities law violations

On their part, crypto companies say that SEC rules are not clear. The companies also say that the agency is overreaching and trying to regulate them.

Lawsuit rattles Coinbase customers

Data firm Nansen has made an initial estimate that Coinbase suffered about USD 1.28 billion in outflows following the lawsuit

Paul Grewal, Coinbase's general counsel, in a statement said the company will continue operating as usual and has "demonstrated commitment to compliance."

On Tuesday, 10 US states led by California also accused Coinbase of securities law violations concerning its staking rewards programme.

Shares of Coinbase's parent Coinbase Global Inc closed down $7.10, or 12.1%, at $51.61 after earlier falling as much as 20.9%. They are up 46% this year.

The SEC has filed the complaint in Manhattan Federal court. In its complaint, the regulator says that Coinbase has made billions of dollars since 2019 by functioning as a middleman on crypto transactions but evaded disclosure requirements that are designed to protect investors.

Also Read | Explained: US charges crypto giant Binance with violating securities laws. What's the case?

The SEC said Coinbase traded at least 13 crypto assets that are securities that should have been registered, including tokens such as Solana, Cardano and Polygon.

Coinbase was founded in 2012. Recently, it served upwards of 108 million customers. It ended March with USD 130 billion of customer crypto assets and funds. Seventy-five per cent of its USD 3.15 billion net revenue was generated by transactions.

The lawsuit filed by SEC is seeking civil fines along with recouping of ill-gotten gains and injunctions relief. In the month of March this year, the SEC had warned Coinbase that charges may be coming

"You simply can't ignore the rules because you don't like them," SEC Enforcement Chief Gurbir Grewal, who is not related to Paul Grewal, said in a statement.

(With inputs from agencies)

You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

WATCH WION LIVE HERE